Ann: Results Presentation FY21, page-75

At a SP of ca. $6.20 one would arrive at the following multiples for FY21

EBITDA: 37x (740 mio shares * 6.2 / $123.4 mio)
NPAT: 57x (740 * 6.2 / 80.7)
These are high multiples.

Exactly 1 year ago, when A2M just came off its high, the same multiples were:
EBITDA: 24.5x (740 mio shares * 18.24 / $552 mio)
NPAT: 35x (740 * 18.24 / 385.8)
So back then, the market valued A2M much more carefully, i.e. lower multiples, than today. With the benefit of hindsight, one is inclined to think that some cautioness had already set in in August 2020 (not that I saw it at the time).

Here comes my holder bias:

Inventory write offs were to the tune of $108 mio vs $3.8 mio in FY2020 ($1.5 mio in 2019); so historically, inventory write offs are much much lower than this year. MVM - as a one-off - is about $10 mio. If I 'normalise' this and add $118 mio back on EBITDA of $123 mio, and include an estimated tax rate of 28%, I get a "normalised NPAT" of $174 mio for FY 2022 or an increase of 216% yoy. - Wouldn't a CEO love that after 18 months at the helm. This simply assumes everything is the same (ceteris paribus), no growth in sales, no increase in cost, just to demonstrate the impact of the these write offs.

I assume this is part of DB's strategy (I haven't looked at his incentive scheme), among other things of course. It would chime in with a strategy of under-promise (like, "predictions about the future and COVID, etc. .... are not possible). The implementation of the ERP should help to prevent a repeat of the write offs. It should also help grow the company and manage cost control (self-evident).

I also assume increased cost from marketing and sales, product development etc. So, the figure I just projected of NPAT of $174 mio is just a target area, but nevertheless way above current level. This looks like a set up for a positive surprise; a deliberate attempt of breaking with a history of negative surprises.

I have no idea at which multiples this stock should trade, but if one computes NPAT of $174 mio and 740 mio shares on issue, it follows

a) NPAT multiple of 35 (1 year ago): $8.23
b) NPAT multiple of 57 (today): $13.40

GLTAH